Construction Routes

Running Head: CONSTRUCTION ROUTES

Construction Procurement
[Name of the Writer]
[Name of the Institution]

Construction Routes

Construction Procurement

Introduction
The procurement plays an essential role for the successful completion of the overall
project. Therefore, a procurement plan is often formulated which assist in deciding what to
purchase, when and from which vendors (Eadie et al., 2013). A procurement method is
assigned during the procurement planning process and then the prospects for fulfilment of
procurement requirements are determine d. The department of procurement is mainly
responsible for purchasing goods and services for a particular business. These responsibilities
comprises of scouting the marketplace for the required goods and services to acquire the items
at the most competitive prices.
It also involves handling all the legal matters and procedures connected with obtaining
a contract together with budgeting expenses for the goods (Morledgeb & Smith, 2013). A
procurement manager is also expected to analyse the changing trends in the industry for the
purpose to make sure that every penny of the company is being spent wisely and most
effectively. A procurement route identify several elements of the clients relationship with the
construction and design teams. It is often regarded as the different procurement options
available for the client. Each route has its own risk, benefits, rewards and responsibilities that
has been analysed before choosing it (Wardani et al., 2015). The effective procurement route
aims to make the right balance between the time, cost and without comprising on the quality as
well as possessing the ability to share the risk in an appropriate manner between the client,
designers and contractors.

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The purpose of this paper is to critical discuss the ability of basic procurement route
types available for delivering and increasing the project success rate. On the basis of the
discussion, one procurement route will be recommended that will work best with LML Ltd.
Company which is planning to build a build a new convention centre as a part of its mega
project. The recommendation will be based entirely on the rationale and reason argument so as to
convince the project manager and sponsor organization for choosing that procurement route.

Types of Procurement Routes

There are commonly three basic procurement routes, each is inherent with its own
variances. These procurement methods includes traditional route, design and build route and
management procurement route (Ruparathna & Hewage, 2013). As a part of critical analysis,
advantages and disadvantages of each procurement route will be discussed along with the
explanation regarding how the risk of cost, time and quality is managed. The act of choosing the
right procurement route is a part of procurement strategy which is devised by the procurement
manager and consultation with the project manager.

Traditional Route
In traditional route or traditional relationships, the client has full responsibility for the
design of the project. It means that client, either through a consultant or internally, construct a
complete and detailed scheme design for the project, while the contractor is provided with the
control of carrying out the works (Allen et al., 2015). The traditional procurement route is often
picked by designer-led projects, in which construction and design teams are managed and
procured separately, one after the other. Also, subcontractors and suppliers can also be involve in

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traditional procurement route. The idea to have an independent project management team
construction and design process can be suitable for more complex or larger jobs so as to ensure
that nothing is missed. The client will have to take the assistance from an independent project
manager if he/she does not have the required skills internally (Fewings, 2013).
Table 1: Traditional Relationship

(Source:
http://webarchive.nationalarchives.gov.uk/20110118095356/http://www.cabe.org.uk/buildings/pr
ocurement/traditional)

Balance of Time, Quality and Cost Risks

The client has the option to control the level of interaction with the contractor and
designer of the project. For owner-occupied projects or prestige, a client may choose this type of
involvement, however, the decision often made on case by case basis (Watermeyer, 2012). Since

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the process is highly simpler in traditional relationship method of procurement, it can be more
appropriate for very small projects. On the other hand, it can prolong the time period for project
completion as a result of sequential and separation of processes in a project.

Advantages of Traditional Relationships

Following are the advantages of using traditional relationship route of procurement:

It can be a helpful and suitable option for technically complex projects since a
two-stage route can mean the initial association of a contractor.

Unless redesign is required to make the project buildable, the cost certainty can be
attained before starting on site (Ruparathna & Hewage, 2013).

The client gets exactly what he or she is wanted, due to the fact of having full
responsibility for the design process in a project.

There is certainty of financial outcome, provided that the client has specified
exactly what required (Tam et al., 2014) is.

There is high level of accountability due to competitive selection.

Disadvantages of Traditional Relationships

Following are the disadvantages of using traditional relationship route of procurement:

It can extend the timeframe for completing the project as compared to other
procurement options.

Lack of input by the contractor in the intimal design and planning phase.

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Since there is no contractor involve in the designing phase, it is possible of

lacking the element of buildability due to inadequate skills of client in terms of
project designing (Tam et al., 2014).

It can significantly make the project more expensive if changes are made in the
design or if it is impossible to construct

This form of procurement route might be unattractive for clients who are more
inclined towards time-dominated or fast-track projects (Allen et al., 2015).

Design and Build Route

In design and build procurement route, the contractor takes the responsibility for all or
some of the design process in a project. Thus, the contractor or builder undertakes the work of
both i.e. the design and construction process in a given project which is usually agreed upon
lump-sum price in advance (Watermeyer, 2012). There can also be a prime contractor in which a
strong relationship is developed between the entire supply chain and the contractor.
The prime contractor can be a design specialist or a builder. In the contract, the
contractor should clearly state the extent of design liability as earliest as possible. The projects
that are based on design and build option may differ depending on the level of contractors
responsibility of design and the extent of initial design is included in the clients requirements.
The client is provided with the control over any design components of the project that are
incorporated in their initial requirements, but the control and responsibility over the design is
passes on to the contractor once the client approves it (Watermeyer, 2012). That being said, the
client has no direct control over the detailed design of the contractor.

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Table 2: Design-Build Route

(Source:
http://webarchive.nationalarchives.gov.uk/20110118095356/http://www.cabe.org.uk/buildings/pr
ocurement/design-and-build)

Balance of Time, Quality and Cost Risks

The contractor assumes the work of construction and design of the project. An employer
may seek to hire a design team at the initial stages in order to prepare its requirements
throughout the project. Moreover, the client can give input on the contractors detailed design. It
is beneficial to opt for an integrated supply team for effective results (Wardani et al., 2015).

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Normally, the time and cost certainty is developed before design and build contract is signed,
however this is subjected to being no consequent modifications by the client. As far as risks of
cost and timing are concerned, it is immediately transferred to the contractor. The client should
ensure that subsequent changes are unlikely to be required, otherwise the project may become
more expensive or even impossible to proceed (Tam et al., 2014).

Advantages of Design and Build

Following are the advantages of using design and build route of procurement:

The client has the price certainty before actually starting the project since the
requirements of the clients are specified, provided that the client does not order
any modifications or changes during the project construction.

It saves substantial cost for the client since he does not have to deal with
contractors and designers separately (Ruparathna & Hewage, 2013).

It can encourage innovation and novelty due to the usage of a guaranteed

maximum price with a savings option split.

The timeframe of project can be reduced due to overlap of construction and

design activities as compared to traditional relationships (Fewings, 2013).

As there is input of contractor into the design, there is improved constructability

in the project.

Disadvantages of Design and Build

Following are the disadvantages of using design and build route of procurement:

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There is likelihood of experiencing major challenges if the client is unable to

provide the design explanation brief to the contractor at the initial stages. As a
result, issues may arise in tender submissions and evaluating proposals.

The employer is expected to commit to blueprint design at an initial phase and is

usually done before the detailed designs are constructed (Eadie et al., 2013).

There is relatively low competition since only few organisations provide the
services of design and build option. The level of output may vary on variations
that are depended upon whether they are integrated, pure or fragmented firms.

There is comparatively low control of the client over the projects design as
compared with other procurement route types (Allen et al., 2015).

Management Procurement
In management procurement, the client hires the contractor as a management professional
for a separate fee. In this form of procurement method, the client has an option to make contract
with management contractor only, or independently with the designer, works contractor and
construction manager (Sundar, 2013). There should a strong connection, teamwork and trust
between design consultants, contractor and client in order for a management contract to be
successful. In most cases, the contractor is ideally be selected no later than the outline design
stage. The input and suggestion can be provided by the contractor on the tender action, design
program, construction program and delivery of goods and materials (Tam et al., 2014).

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Table 3: Management Procurement Route

(Source:
http://webarchive.nationalarchives.gov.uk/20110118095356/http://www.cabe.org.uk/buildings/pr
ocurement/managed-forms)

Balance of Time, Quality and Cost Risks

As discussed above, the client has significant control over the design since a separate
contract is made with design team. However, it is difficult to obtain the cost certainty before
construction in management procurement due to the fact that design is established in parallel
with the construction process (Allen et al., 2015). Some way through the process, target prices
can be established and sometimes, guaranteed maximum can be delivered. It is advisable for the

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client to involve the management contractor at an early stage for complex or large projects since
they possess wide knowledge of expertise in building, thus increasing projects performance.

Advantages of Management Procurement

Following are the advantages of using management route of procurement:

It enables increased collaboration and coordination between contractors and

designers since client deals with only one firm.

Due to the overlap of activities of construction and design work, substantial

amount of time can be saved and invest in other project processes (Morledgeb &
Smith, 2013).

The contractors takes the responsibility and risk for the integration of the design
with construction under a design and manage form.

There is high level of constructability due to constructors involvement into the

design.

There is flexibility for changes in design without sacrificing cost controls, as

compared with other procurement methods (Wardani et al., 2015).

Disadvantages of Management Procurement

Following are the disadvantages of using management route of procurement:

Proactive and informed client is needed.

There is very low price certainty in this procurement method (Watermeyer, 2012).

It carries more risk than design and build method because client has independent
contractors with several participant along the project process.

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The resources have to be committed to the project for design completion, so client
must provide a good quality brief to construction management team, design team
and contractor (Morledgeb & Smith, 2013).

Recommendation to LML Ltd Company

It is recommended for the LML Ltd Company to use the management procurement route
keeping all the project specification provided by the client. More specifically, management
contracting which is a variant of management procurement is more appropriate for this type of
clients specification. In management contracting, the clients hires a separate and independent
professional teams as well as a management contractor (Tam et al., 2014). They will act as an
adviser to the team at pre-construction stages, and they will take the responsibility for smooth
execution of the work using direct works contracts. Thus, the risk of owner will significantly be
reduced using this method. It is likely to make an early start on-site and achieve early completion
with this type of contract (Eadie et al., 2013).
The client will have a separate contract with the design team and the client will provide
the basic design specifications to the design team. However, the management contractor will be
largely involved early in the design process so as to take utmost advantage from his skills to
improve the cost and buildability of proposals as they develops. The project that is desired from
the client lies in the category of complex project equipped with certain technical requirements.
Thus, management procurement will be most suitable for this kind of project. In contrary, design
and build route is not preferable for projects that are prestigious and complex (Wardani et al.,
2015).

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The traditional route is clearly inappropriate for the firm since it does not have the
internal capability to construct the design. Although, design-build route provides the flexibility
when the scope design is likely to change, but it can be highly expensive since single firm is
undertaken with the work of design and construction. In contrast, it enables the client to modify
the design during construction because matters of detail and drawings can be adjusted and
finalized as the work proceeds without increasing the cost (Ruparathna & Hewage, 2013).
Furthermore, the client does not have the required skills for managing the project as specified in
the assignment brief, thus the management contractor will monitor and manage the project
activities on behalf of the client.
The management procurement is recommended assuming that the clients wants to have
certain degree of control over the design, which is not possible in traditional and design-build
procurement method. Although the management contractor is contracted for a separate fee,
increasing the overall cost of the project, it can allow the project to be completed on due
timeframe (Fewings, 2013). To lessen the price uncertainty, the client can take help from cost
consultants who are hired prior to the concept phase, advising on cost control plan and budgets.

Conclusion
The act of choosing the right procurement route is highly imminent for clients embarks
on a large and complex projects. In recent years, much more emphasize has been provided to
having sound procurement strategy that is strategically aligned with the clients core business
objectives. In its simplest terms, a procurement strategy documents how the firm will run its
procurement functions effectively. The process of selecting the most suitable procurement route
type is the one of the basic element of the overall procurement strategy. A procurement method

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helps to explain the complex network of relationships which are developed between clients,
construction companies, contractors and sub-contractors.
There are several methods in which the arrangements can be made and organized
between the clients, designer and building contractors. The decision to choose any procurement
route type should be made on the basis of market availability, management skills, quality
requirements, timeframe, complexity and the amount of funds and resources available to the
employer. The paper critically discussed the pros and cons of each of the three procurement route
types and keeping in view the LML Ltd Companys project specification, the management
procurement method would be most appropriate and effective for the firm for achieving high
project performance within the available budget and time period

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References

Allen, M., Herring, K., Moody, J., & Williams, C. (2015). Project Procurement: Impact of
Contract Incentives and Penalties. International Journal of Global Business, 8(2).
Eadie, R., McKeown, C., & Anderson, K. (2013). The impact of recession on construction
procurement routes. International Journal of Procurement Management, 6(1), 24-38.
Fewings, P. (2013). Construction Project Management: an integrated approach. Routledge.
Retrieved from: https://books.google.com/books?
hl=en&lr=&id=eYMmLJHGrmgC&oi=fnd&pg=PP2&dq=procurement+strategy+
%2Bproject&ots=pBodL0r_v5&sig=EtnVbuCpCUYlrjC8Hpy3iLMv27g
Morledge, R., & Smith, A. (2013). Building procurement. John Wiley & Sons. Retrieved from:
https://books.google.com/books?hl=en&lr=&id=Yrk1OKmTe0C&oi=fnd&pg=PT9&dq=design+led+project+procurement&ots=r8ZbRazQQ
v&sig=sZYCvS0IjvClrKXHokjaiXz_lUw
Ruparathna, R., & Hewage, K. (2013). Review of Contemporary Construction Procurement
Practices. Journal of Management in Engineering.
Sundar, S. B. (2013). Efficacy of procurement managment in construction projects and
property. International Journal of Marketing and Technology, 3(7), 30.
Tam, V. W., Fung, I. W., Chan, J. K., & Yu, M. S. (2014). Adoption Of Design And Build
Procurement Method: An Empirical Study On Wynn Macau Resort. International journal
of construction project management, 6(1), 3.

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Wardani, M., Messner, J., & Horman, M. (2015). Methods for design-build projects', Journal of
Construction Engineering & Management, vol. 132, no. 3, pp. 230-8. Management, 25,
375-385.
Watermeyer, R. B. (2012). A framework for developing construction procurement
strategy. Proceedings of the ICE-Management, Procurement and Law, 165(4), 223-237.